North Star Metrics - PM Tip of the Week EP04

Key Takeaways

[Music] welcome to episode 4 of pm exercises weekly where we talk about something related to product management every week for just a couple of minutes this week i thought it would be a good idea for us to talk about northstar metrics and what they are and why they are important sometimes there's a bit of a confusion around what is a northstar metric how is it different than success metric and why they are important and the way i think about north star metrics you're going to keep it very simple is that it's that metric that if you grow it it helps you achieve your objective so i'll give you an example let's say in the case of amazon their objective is to grow revenue right they want to let's say they want to grow revenue per user right and then they found out through their lot of research and studies and looking at the data that if you can convert somebody to a amazon prime member then the revenue per user will actually increase for that particular individual so in this case your north star metric would be total number of prime members or let's say that for uber uber found out early on that if you could get somebody in an uber car for three times you basically have them as a lifetime customer so in that case your north star metric is total number of uber customers or uber users who have taken at least three times right and what's important about this kind of metric is like once you're aware of it you're able to really align all your product initiatives engineering effort and everything around driving that particular number so for example you can offer three rides for free because you know once you achieve that you're gonna have so much more value out of them or if you're amazon you might decide that you're gonna offer so much value for people to become a prime member that it actually makes sense for you to pretty much give it away for free or give it at a really low cost so hope that's helpful in terms of like what it needs um to measure north star metrics sometimes it's very hard to know what your north star metric is and you might have to do a lot of research work with data scientists hire an external expert that can help you but what is your northstar metric i hope you know what your northstar metric is for your product if you can drive that metric you're going to be successful product manager thank you [Music]